LBH, Canada has always been real economy loser with respect US trade with ~80b goods / services deficit AFTER discounted energy - cheap crude sales to US to fuel US refinery mismatch. US doesn't have strategic domestic energy self sufficiency without Canadian crude, CAN sludge should be selling at premium (same with VZ but we see how that went). In an ideal world Canada could be making more refining and selling high margin refined fossil to global markets and not sending ~80b to US.
Which is to say, if Canada sorts out inter provincial trade, pivot to domestic goods/services and sell commodities globally at benchmark prices it on paper come out ahead. Nvm associated brain drain via US integration killed what was left of Canadian tier1 industries (not much to be done). Or half reason CAN has to sell cheap to US is US lobbying (read political meddling / foreign influence) on infra/pipelines. Or discount NORAD which LBH missiles over polar orbit aren't stopping at Canada, as if Canada needs to free ride on NA security architecture.
TLDR is Canada always loser of even happy vassal arrangement, the carrot was always stale but it dint' need to be sweet with how big US stick is. But stick not big enough to force CAN to deepthroat new rotten carrot arrangement. At least not yet.
USMCA (and the 2 deals that preceded it) are definitely better deals for the US than they are for Canada. But they're fairly generally believed to be win-win deals; it's just that the US wins more than Canada.
If you're playing a single football game, the lesser winner is the loser. However, the economy is not a single football game. In real life the lesser winner is still a winner.
They know the stick is huge but with how everything is going with US and the TACO mentality they feel US will be back on the table once the reality starts hitting.
The whole story about why the talks failed:
https://www.nytimes.com/2026/08/25/world/canada/trump-carney...
US having veto over Canada trade negotiations, dictating language policy which could cause Quebec to cede from Canada, and stop the "buy Canadian" policy put after the last tariff round etc. It not even a stick anymore it is a proper gun which blow in the face of any Canadian who agrees to these terms.